PetroChina becomes world's biggest company

PetroChina, China's largest oil and gas producer, became the world's first trillion dollar company today after floating on the Shanghai stock market.

In scenes reminiscent of the dotcom boom, investors rushed to buy shares in the company. They floated at 16.7 yuan (107p), and almost tripled to close at 43.96 yuan, giving the group a market capitalisation of around $1 trillion (£480bn).

As well as leapfrogging ExxonMobil – whose $480bn market capitalisation had previously made it the world's biggest company – PetroChina is worth nearly twice as much as the combined value of Royal Dutch Shell and BP.

Analysts said that PetroChina was benefiting from the soaring price of oil and gas, but cautioned that the stock was also fuelled by people seeking a quick profit by speculating on the Chinese stock market.

"The opening price is really too high as far as PetroChina's corporate fundamentals are concerned," industry analyst Wang Jing at Orient Securities in Shanghai told Reuters.

Another factor behind PetroChina's huge market valuation is that just 2% of its shares were floated on Monday. China's growing army of small investors are still restricted from trading shares on overseas markets, and this has helped the benchmark Shanghai index more than triple in the last year.

Several influential analysts have warned that China's stock market boom is a bubble that will soon burst. Former Federal Reserve chairman Alan Greenspan warned in May that China's stock market was due a "dramatic correction" - since when it has gained another 35%.

Legendary investor Warren Buffett has also expressed concern about China, warning recently that its stock markets were "too hot".

Mr Buffett had been a significant investor in PetroChina, but he will not profit from today's flotation. In October he revealed he had sold his entire stake in the company, which had already listed in Hong Kong. At the time, Mr Buffett reportedly told Fox Business News that he had "sold a little too soon" as the stock had risen since his sale.